Sorry EV manufacturers, FM gives a miss on electric vehicles in Union Budget 2021

The electric vehicle manufacturers and startups which hold the future of the automotive industry are left in the lurch as Finance Minister Nirmala Sitharaman has not announced any new policy for them, especially for electric vehicles.

NEW DELHI: Union Budget 2021-22, the most awaited announcement of the year, had all ears of top industrialists, leaders, entrepreneurs, and common man. Among them all, electric vehicle manufacturers and startups that hold the future of the automotive industry were left in the lurch as Finance Minister Nirmala Sitharaman did not announce any new policy for them, especially electric vehicles.

The voluntary scrappage policy announced by the FM may indirectly boost demand for electric vehicles. But the increased customs duty on certain auto components to boost domestic manufacturing will hurt the electric vehicle manufacturers as it will increase their cost in India.

However, the new-age companies and startups in the domain cheered the finance minister’s announcement for another year of tax holiday for them.

Industry watchers believe that the Union Budget is progressive and growth-oriented for the long term, but in the short-haul, it will hurt certain parts of the automotive industry.

“The budget is very forward-looking; the focus on infrastructure spending will boost the job market and build confidence in the industry. It’s a step to a robust economic reform agenda. The budget did not say much on the automobile sector, especially on EV. Raising custom duty will increase the cost of EVs. Overall 2020 has ended up disappointing the EV sector,” Harsh Didwania, co-founder and director, EeVe India, said.

”For EVs, the main expectation was a firmer policy commitment from the govt. One of the key measures for doing so would have been to fix the inverted duty structure for components such as batteries from 18% to 5%, and for charging/swapping infrastructure services also from 18% to 5%.Chetan Maini, chairman and co-founder, SUN Mobility ”

Martin Schwenk, managing director, and CEO, Mercedes-Benz India, said, There could have been a further push towards e-mobility by lowering import duties on EV. Rise in import duty on certain parts will increase the production cost.”

Electric vehicle manufacturers were also expecting clarity on the inverted duty structure on batteries. A lithium-ion battery fitted in an EV attracts 12% GST, but it has 18% GST when sold separately.

Chetan Maini, chairman and co-founder, SUN Mobility, said, “For electric vehicles, the main expectation was a firmer policy commitment from the government for accelerating e-mobility and enabling charging and battery swapping infrastructure in the country. One of the key measures for doing so would have been to fix the inverted duty structure for components such as batteries from 18% to 5%, and for charging/swapping infrastructure services also from 18% to 5%.”

However, the allocation of INR 18,000 crore to procure 20000 buses to strengthen public transport is encouraging for the industry. “The scheme could strengthen the EV industry if more number of e-buses could be supported through the scheme. We urge the government to mandate procurement of e-buses under the scheme which would help us fight the issue of air pollution,” Sohinder Gill, director general, Society of Manufacturers of Electric Vehicles, said.

Source : auto.economictimes